Fund mandates could improve corporate behaviour

Superannuation funds could utilise the handling of mandates to ensure better corporate governance and compliance with the UN Principles for Responsible Investment (UNPRI), according to one of the authors of those principles.

The London-based chief executive of Hermes Equity Ownership Limited, Colin Melvin, said superannuation funds could assist in improving the behaviour of corporates through their mandate processes.

Addressing an Australian Institute of Superannuation Trustees (AIST) conference on the Gold Coast, Melvin also warned against expecting too much from Governments with respect to the regulation of practices within the financial services industry.

He said that the ownership of luxury cars and the receipt of big bonuses were symptoms of the problems with respect to governance issues in the financial services industry, but not the problem themselves.

“People are being incentivised on revenue rather than profit,” Melvin said.

He said that it was hard to rein in practices in the financial services sector via Government regulation in circumstances where companies could simply move jurisdiction.

“We need to do it (impose limits) ourselves,” Melvin said.